The retail pharmacy division of CVS Caremark Corp. agreed last week to pay $17.5 million to settle allegations that it routinely overbilled the government's Medicaid prescription programs in 10 states, including Minnesota. CVS was allegedly inflating claims for the prescription co-pays that Medicaid picks up for those patients who are primarily covered by private health insurance.
Whistleblower Stephani LeFlore of St. Paul, Minn., who started as an overnight CVS pharmacist in 2008, alerted authorities to the alleged overbilling after noticing billing discrepancies in CVS' customized pharmacy computer system. She'll get $2.6 million in a settlement.
The company, based in Woonsocket, R.I., said in a statement that it didn't intentionally overcharge any state Medicaid program. It also noted that the group of patients at issue, who qualify for both Medicaid and third-party insurance, make up a small percentage of the overall Medicaid population.
The case was filed in 2008 under the federal False Claims Act and sealed. It was unsealed Friday when the settlement was reached.
LeFlore could not be reached for comment. One of her four lawyers, Bob Christensen in Minneapolis, called the $17.5 million "a significant amount of money recovered for the taxpayers."
"This person took a risk to bring this to the attention of the government," he said.
CVS will pay the federal government $7.9 million plus interest, and the states $9.5 million plus interest. The states include Alabama, California, Florida, Indiana, Massachusetts, Michigan, Minnesota, New Hampshire, Nevada and Rhode Island.
The U.S. Department of Justice announced the settlement Friday, saying it is emphasizing combating health care financial fraud.
"Medicaid covers the poorest, most vulnerable people in American society. Overcharging this needed government program for prescriptions is a disservice to everyone and won't be tolerated," said Daniel Levinson, inspector general of the U.S. Department of Health and Human Services, in the statement.
In 2008, CVS agreed to pay $36.7 million to settle charges that it overbilled Medicaid by substituting more expensive capsules of a popular generic antacid instead of the prescribed tablets.
At least two other national drugstore chains, including CVS rival Walgreen Co., settled similar drug-switching cases that year.